Australia in driver’s seat but US trade deal some | Australian Markets
The chief economist on the nation’s greatest bank has warned an Australian trade deal with the US could possibly be some time away given the complexity concerned and America’s push for elevated market entry.
Commonwealth Bank’s Luke Yeaman additionally mentioned there was a risk that if Donald Trump doesn’t strike offers with key trading companions earlier than the July 9 deadline — when the pause on the US President’s reciprocal tariffs is because of resume — he could “lose patience and reinstate unilateral tariffs . . . sparking another round of volatility in global markets”.
It comes because the Australian sharemarket swung on Friday following turmoil in the US, following an ugly exchange between Mr Trump and Elon Musk that wiped more than $US150 billion ($231b) off the worth of Tesla.
Prime Minister Anthony Albanese additionally signalled he was ready to make concessions permitting American beef into the nation as deliberations ramp up.
Mr Yeaman mentioned Australia remained in a “relatively strong negotiating position” because the nation’s tariffs are equal to Mr Trump’s international minimal degree of 10 per cent.
He mentioned the current transfer to double metal and aluminium taxes to 50 per cent can be a concern, but the Federal Government gained’t really feel pressured to conclude an settlement rapidly.
“Using the UK deal as a template, an Australian trade deal could still be some time away,” Mr Yeaman mentioned.
“There are obvious areas for co-operation (critical minerals), but addressing key US asks around market access for US beef exports, the Pharmaceutical Benefits Scheme, regulation of US tech companies and defence spending won’t be easy.”
Last month, the UK turned the primary nation to comply with a trade deal with the US since Mr Trump imposed the sweeping tariffs in April.
Prime Minister Keir Starmer this week mentioned Britain hoped to ink a pact with the US in the subsequent two weeks to keep away from the new tariffs on metal.
Mr Yeaman mentioned these talks — alongside America’s negotiations with China and the European Union — supplied important insights into the Trump administration’s considering.
He mentioned final month’s US-China trade conflict pause confirmed each international locations have an financial “pain threshold” they’re unwilling to cross — albeit a high one.
“This takes some severe downside scenarios off the table, but tensions will remain high and further bouts of escalation are likely,” Mr Yeaman mentioned.
“Whenever two superpowers ‘play chicken’ there is always a risk of a head on crash. With US-China tariffs escalating to over 125 per cent, it appeared that could be the outcome (and a severe global recession).
“Both countries have now shown that they do not want to go down that road — the economic costs are simply too high.”
But regardless of the de-escalation, Mr Yeaman remained uncertain a complete US-China trade settlement can be settled by August 14.
AMP deputy chief economist Diana Mousina mentioned financial markets appeared to stay assured Mr Trump would pull back from the brink.
“US sharemarkets have had a massive rally in recent weeks, and are up by 19 per cent since the post-Liberation day lows,” she mentioned.
“It is hard to see this positive momentum continuing when Trump’s tariffs are still up in the air.”
There had been a lot of dangers weighing on shares together with the trade battles, American debt and tensions in Iran, Ms Mousina mentioned. The Aussie greenback might stay weak in the near-term, she mentioned.
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